SOURCES OF THE US ECONOMIC BOOM

PAST QUESTIONS

• What were the achievements of the US economy 1945-68 and what factors limited its growth 1968-89 (2017)

• What were the strength and weaknesses of the US economy 1945-89? (2016)

• What was the American Dream and how was it reflected in life in the US 1945-89? (2015)

• What were the significant developments in the US economy 1945-89? (2014)

• What was the impact on the US economy of one or more of the following: the Multinational Corporation, the Military Industrial Complex, international competition from Japan and Europe? (2013)

• To what extent did the US economy experience success and decline during the period 1945-89? (2012)

• Why did the US experience an economic boom 1945-68 and what was its impact on society? (2010)

What is happening here?

WORLD WAR 2’S IMPACT ON THE ECONOMY

• Demand for labour – need more soldiers/workers

• Demand for new and better weapons encouraged technological development

• Wartime technologies (e.g. Radar) could be used for peacetime roles – creating more jobs and developing economy

• Savings increased during the war – spent at end of war, spurring economic growth

• No need to spend money repairing war damage (unlike Europe)

PUBLIC INVESTMENT

How would public investment lead to an economic boom?

What was the biggest area of government spending?

What is Keynesian economic development?

Give one example of investment in education?

DEVELOPMENT OF CORPORATIONS

FOREIGN INVESTMENT – 1960 % 1973

0

20

40

60

80

100

120

140

160

180

1 2

CAUSES OF MULTINATIONAL EXPANSION

• Successful in _________ market – able to expand abroad (McDonalds)

• Greater ____________ & ____________ skills

• Growth of World ________ (e.g. Europe) after WW2

• Investment in __________ and Development (R&D)

• Tax laws encouraged __________ __________(e.g. Ireland)

• Federal _____________ for companies

• Dollar ($$$) became world’s biggest ____________

What was Eisenhower’s fears concerning the Military Industrial Complex?

What companies could be involved in this?

The Birth rate in the US increased dramatically in the 50s and 60s. Why?

What do we call this event? (and people who were born in this time)?

These two charts show the Rural-Urban population breakdown between 1940 and 1990.

How would movement to cities contribute to an economic boom?

Housing before World War 2

ECONOMIC DECLINE IN THE US

What was his great domestic programme called?

What War did he fight in Southeast Asia?

What did he bring in in 1964?

How did he pay for it?

What did It cause?

BY 1973

• Pent Up demand for housing after world war two had been satisfied

• Economic drag of paying for Vietnam War

• Growing budget deficit of 1960s paid by borrowing (leading to more debt & inflation, less money available to federal government to spend)

• Balance of Payments (Imports vs Exports) had worsened

1973 – THE OIL CRISIS

• In an effort to punish the US and other countries for supporting Israel, Arab Oil Producing Countries (OPEC) raised the price of oil dramatically

• This led to shortages and increased fuel costs – which had knock on impacts on other parts of the economy

Do you recognise anyone in this cartoon?How would you reference this in an essay?

1979 – THE IRANIAN REVOLUTION

1979 IRANIAN REVOLUTION

• This saw the creation of an Islamic Republic in Iran

• US was blamed for supporting the unpopular leader of Iran (the Shah) – this led to a hostage crisis as the US Embassy in Tehran was occupied by Iranians

• President Carter was seen as weak and indecisive in his response to the crisis

• Created a second “oil shock” which impacted directly on the US economy

REAGANOMICS

• Reagan believed in cutting taxes (to spur individual spending) and reducing government spending in areas such as education and welfare.

• This led to economic growth and a reduction in unemployment

• Spending on defence increased which led to a deficit

• Gramm-Rudman act -

FOREIGN COMPETITION

What were the main achievements of the US economy 1945-68 and what factors limited its growth 1968-89?